THANK GOD FOR THE INDIA STACK
Shutting access to apps in the aftermath of sanctions against Russia holds a mirror to the strategic risks of dependency on foreign tech providers. EPISODE #63
A very Happy Monday to you.
Last week the Western block of nations led by the United States upped the ante on the sanctions imposed against Russia. This included a proposal to cut off access to the Internet. Earlier Visa and Mastercard shut down the access of Russian financial institutions access to their payment gateway.
Whether or not these will work is another story. The big takeaway is that it reveals the vulnerability of a country dependent on external agencies for managing part of its tech backbone. In the new age of war, tech will be the epicentre. It is therefore of considerable relief that India with its indigenously developed tech stack has mitigated its vulnerability to such untoward actions.
A friend of mine who is high up in the Indian cyber security food chain had warned against this some two years ago. Have always trusted his insights. Now all the more.
So this week I shine the light on the India Stack. As a regular reader you may recall that I have frequently tracked its applications. Like I said in the headline, ‘Thank god for the India Stack’. Do share your feedback.
This week’s cover picture is from a random visit to the Flying Club in Delhi. Came across this very striking mural on the front wall of what is the designated indoor badminton court.
A big shoutout to Gautam and Vandana for your informed responses, kind appreciation and amplification for last week’s column. Gratitude also to all those who responded on Twitter and Linkedin. Reader participation and amplification is key to growing this newsletter community. And, many thanks to readers who hit the like button😊.
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TOOLS OF WAR
Last week Russia bore the brunt of Western sanctions. With American MNCs toeing the party line, a range of applications powered on payment gateways provided by Visa and Mastercard ceased to function.
This crackdown is likely to get worse. Another matter though that the Russians had simulated this circumstance. So they were prepared. Yes the shut down will hurt, but not to the extent desired. Exactly why Ukraine is now proposing that Russia’s access to the Internet should be shut down.
They have written to the Internet Corporation for Assigned Names and Numbers (ICANN), a US-based non-profit which services the worldwide Internet, asking them to revoke the Russian domains like “.ru” and shut down DNS (Domain Name System) root servers (which translate a domain name into an IP address to access online requests).
If ICANN agrees then Russian web sites will be unreachable and simultaneously make connectivity spotty. However such an action would be egregious and would effectively be the death knell for the worldwide Internet.
In any case Russia has prepared for this eventuality. A Reuters story says that not only did Russia pass a law to ensure sovereignty of its Internet, but it also simulated the circumstance last year.
“Russia managed to disconnect itself from the global internet during tests in June and July, the RBC daily reported on Thursday, citing documents from the working group tasked with improving Russia's internet security.
Russia adopted legislation, known as the “sovereign internet” law, in late 2019 that seeks to shield the country from being cut off from foreign infrastructure, in answer to what Russia called the “aggressive nature” of the United States' national cyber security strategy.”
Please click here if you wish to read the full story.
Another way of looking at this is that the Western block of nations have revealed their strategic hand. I am sure they have many more tricks up their sleeve. Regardless the crackdown using the Western world’s tech leverage to financially isolate Russia is a wake-up call to every nation. Especially in a fluid world where, depending on circumstances, enemies morph into friends and vice versa.
The India Story
In the Indian context, whether by accident or design, an alternative solution already exists with respect to payments.
India already has its answer to Visa and Mastercard in Rupay. From an also-ran in 2016, Rupay today enjoys the largest market share and is now expanding its global footprint.
I recall how a few years ago some officials from one of these MNCs (not naming them as it was a background chat) had turned up at my then office complaining how the Indian authorities were favouring Rupay and was capping the Merchant Discount Rate (MDR)—the 1-3% fee that Visa and Mastercard used to earn on every transaction (imagine the profits from just being a gatekeeper). Soon they even nudged the US government but mercifully India stuck to its ground.
Analysts and commentators have rightly picked on the strategic comfort the Rupay has given to India—something that was not so apparent then.
Sharing a few links from Twitter below.
Their observations are spot on. Actually India has done one better than just finding their own alternative. The India Tech stack is a state-of-the-art innovation that has tapped an Open Digital Ecosystem to create public digital assets (PDAs), which in turn can be mixed and matched like building blocks to create applications like Aadhaar, CoWin, One Nation, One Ration Card and so on.
I have written about this at length in an earlier post and hence will not repeat myself. Sharing the link below. Do read it to understand and appreciate India’s remarkable achievement.
In fact I believe this is a serious cause for heartburn to the US-based MNCs—Visa and Mastercard continue to make 3% on every transaction in the US as a concept like UPI is missing in action there—and have enormous clout with the US government. I suspect the inevitable blowback for India’s ambiguity on the Ukraine face off will manifest in fresh pressure being mounted against the India tech stack.
One source of vulnerability will be the issue of privacy of data harvested by the Indian tech stack. Well meaning, self-appointed (and often agenda driven) privacy warriors are mounting a fresh campaign. To preempt this challenge India should fast track the privacy law that has been in the making for a decade. To underestimate the nuisance power of MNCs and the Western establishment would be a fatal error.
Last week NooTopic—a room co-hosted by Debu, Srinath and me on Twitter Spaces—explored a new topic: The future of the humble tea shop or chai pidia as it is called in Kerala.
This time the guest speakers were: Riyaaz Amlani, the serial food entrepreneur, and Nidheesh M K, a journalist (and a former colleague) based out of Kerala.
Yes, the turnout was low this time, but the insights were fantastic. Sharing a sampling from the conversation.
Riyaaz who is exploring the next avatar of the cafe said:
“When we created Mocha, we had created it for the Gen-X's, right. At that point of time, people did not have as much access to quality cafes. I think it's got a lot to do with how culturally we have evolved with the Gen-X who had a very different set of role models and heroes. For example, Gen-X's were always rooting for the rebel, the heavy metal, the rock and rollers, the misfits; the people who are actually taking up a kind of anti-establishment stance.
What we're seeing with Gen-Z is they have no problem with the establishment. Their heroes are not people who go against the establishment. Instead their heroes are people like Mark Zuckerberg and the founders of Google and these kind of new age heroes, right. So a lot of the conversation is not around cool culture and rebelling. Instead it is about creating an app that will change the world.
And I think the social spaces will need to reflect a kind of a change in people's mindset when it comes to what their aspirations are and what their goals are.”
I would suggest you listen to the entire recording. Please click this link. (Bear in mind the recording will be automatically deleted by Twitter after a month and hence has a limited shelf life.)
Sharing feedback from a friend who missed out listening to the live broadcast but heard the recording and was suitably impressed.
“Incidentally I have to tell you this, my daughter was so keen to start a cafe when she was in school, way back then she had a name too- Coffee n. Conversation 🙂. For that matter she still wants to.”
Hopefully this Gen-Z is sufficiently inspired by the chat to launch her venture in a New India which is so rapidly transforming.
Till we meet again next week. Stay safe.
Excellent article Anil!! As you rightly pointed out, obstacles are both local and global. We should move forward with the Data Privacy Law, which will pave way for filling up many loopholes and policy absence. Hope this becomes a reality in the coming Parliament Sessions.
Another interesting article!! As you rightly say, the ripple of India Stack 's success are already spreading around the globe. It has given the world a model for closing the gap in financial inclusion and effectively delivering services to the citizens. It has created a unified software platform to bring India's population into the digital age.
But there are still some major issues.India is still mostly a cash economy where around 90% of transactions settle in cash .only 1/3 of population has a smart phone and cybersecurity is a major concern. But no doubt our progress has been remarkable with AADHAR being the world's biggest biometric identity database and the progress of our digital payments infrastructure ( NPCI).